THE WASHINGTON EXAMINER
"White House rallies around 'not inevitable' line as recession fears grow"
Haisten Willis
21 JUNE 2022
The White House has spent the last few days repeating that a recession is "not inevitable" despite economists and most people seeming to think the economy is headed that way.
President Joe Biden, National Economic Council Director Brian Deese, and Treasury Secretary Janet Yellen have all repeated in recent days that a recession isn't imminent while touting positive aspects of the economy.
"First of all, it's not inevitable," Biden told the Associated Press last week.
"Secondly, we're in a stronger position than any nation in the world to overcome this inflation."
The president followed that up Monday morning by saying he'd spoken with former Treasury Secretary Larry Summers, who himself is predicting a recession, and repeating that "there's nothing inevitable about a recession."
Deese said during a Sunday appearance on CBS's Face the Nation that "not only is a recession not inevitable, but I think that a lot of people are underestimating those strengths and the resilience of the American economy."
He pointed to increased household savings and low numbers of people skipping credit card and mortgage payments as evidence.
The same day, Yellen told ABC News, "I don't think a recession is at all inevitable," while conceding that the economy is likely to slow going forward and that inflation is unacceptably high.
Despite the trio's words, a recent poll found that more than 60% of CEOs globally said they expect a recession before the end of 2023, which echoes the prediction made by Summers.
A recession is generally defined as two consecutive quarters of negative gross domestic product growth.
The first quarter of 2022 has already been deemed negative, so a recession could be confirmed when second-quarter numbers are released next month.
For this reason, many pundits say the R-word is already upon us.
"We're already in recession," said conservative economist Stephen Moore.
"The last six months of growth has been negative."
"The ship is capsizing, and the captain is saying everything is all right rather than getting the life jackets on."
"Employment may go negative in the next few months due to hiring freezes and layoffs."
"Housing sales have come to a standstill."
It's always up for debate how much influence any president has over the economy.
Nonetheless, presidents often take credit for economic growth and take blame from voters when it slows.
Biden’s job approval rating on the economy is just 34%, according to the RealClearPolitics polling average.
Yet Biden continues to insist that a recession may not be in the cards — and he persists in downplaying those who say it's likely.
"No, the majority of them aren't saying that," the president said Monday in a response to a question about a recession being "more likely than ever."
"Don't make things up," he continued.
"Now you sound like a Republican politician."
"That's a joke — that was a joke."
The odds of a recession have surged to 72%, according to Bloomberg Economics models, as the Federal Reserve raises interest rates to counter inflation.
The Fed announced last week that it would hike its benchmark interest rate by 0.75%, marking the largest single increase since 1994.
Despite the growing fears, or perhaps because of them, Democratic strategist Brad Bannon feels it's important for the White House to reassure the public of the economy's strengths.
"Most Americans do believe we're in a recession now, and if we're not, I think it's good for the administration to say that," he said.
"It may not impress a lot of people, but the unemployment rate is ridiculously low."
"There are a lot of good things happening with the economy."
Biden is still trying to get some of his agenda through Congress, such as efforts to lower prescription drug prices, provide tax incentives to reduce utility bills, and raise taxes on corporations.
Bannon says working to get such a deal passed and talking about it are the most important things the president can do now to help his standing with voters in November.
"It will all depend on what the economy looks like," he said of the midterm elections.
"If we're in a serious recession, obviously it's going to hurt the Democrats."
https://www.msn.com/en-us/money/markets ... 51f1325db6
POLITICS
Re: POLITICS
REUTERS
"Biden approval falls fourth straight week, tying record low - Reuters/Ipsos"
By Rose Horowitch
22 JUNE 2022
WASHINGTON (Reuters) - U.S. President Joe Biden's public approval rating fell for a fourth straight week to 36% matching its lowest level last seen in late May, according to a Reuters/Ipsos opinion poll completed on Wednesday.
The president's approval rating has stayed below 50% since August, a warning sign that his Democratic Party could lose control of at least one chamber of the U.S. Congress in the Nov. 8 midterm elections.
Thirty-four percent of Americans say the economy is the most important issue currently facing the United States.
Biden has been plagued by 40-year-highs in inflation, with Russia's invasion of Ukraine restricting global fuel supply and supply chains still constrained by the COVID-19 pandemic.
Among his own party, Biden's approval rating remains largely unchanged since last week - at 73% compared to 74% on June 15.
In August, 85% of Democrats approved of Biden's performance.
But among Republicans, Biden's rating slipped to 7% compared to 11% on June 15.
Only 18% of Americans think the country is headed in the right direction.
Biden's approval rating is approaching - but has not yet reached - the lowest levels seen by his predecessor, Donald Trump, who had a 33% approval rating in December 2017.
The Reuters/Ipsos poll is conducted online in English throughout the United States.
The most recent poll gathered responses from 1,002 adults, including 435 Democrats and 379 Republicans.
It has a credibility interval - a measure of precision - of four percentage points.
(Reporting by Rose Horowitch; Editing by Scott Malone and Sandra Maler)
https://www.msn.com/en-us/news/politics ... 59982ea970
"Biden approval falls fourth straight week, tying record low - Reuters/Ipsos"
By Rose Horowitch
22 JUNE 2022
WASHINGTON (Reuters) - U.S. President Joe Biden's public approval rating fell for a fourth straight week to 36% matching its lowest level last seen in late May, according to a Reuters/Ipsos opinion poll completed on Wednesday.
The president's approval rating has stayed below 50% since August, a warning sign that his Democratic Party could lose control of at least one chamber of the U.S. Congress in the Nov. 8 midterm elections.
Thirty-four percent of Americans say the economy is the most important issue currently facing the United States.
Biden has been plagued by 40-year-highs in inflation, with Russia's invasion of Ukraine restricting global fuel supply and supply chains still constrained by the COVID-19 pandemic.
Among his own party, Biden's approval rating remains largely unchanged since last week - at 73% compared to 74% on June 15.
In August, 85% of Democrats approved of Biden's performance.
But among Republicans, Biden's rating slipped to 7% compared to 11% on June 15.
Only 18% of Americans think the country is headed in the right direction.
Biden's approval rating is approaching - but has not yet reached - the lowest levels seen by his predecessor, Donald Trump, who had a 33% approval rating in December 2017.
The Reuters/Ipsos poll is conducted online in English throughout the United States.
The most recent poll gathered responses from 1,002 adults, including 435 Democrats and 379 Republicans.
It has a credibility interval - a measure of precision - of four percentage points.
(Reporting by Rose Horowitch; Editing by Scott Malone and Sandra Maler)
https://www.msn.com/en-us/news/politics ... 59982ea970
Re: POLITICS
City AM
"Inflation jumps to 9.1 per cent: Worried City insiders respond to consumer prices climbing again"
Michiel Willems
22 June 2022
The rate of inflation rose again in May, remaining at 40-year highs, the Office for National Statistics said this morning.
The rate of Consumer Prices Index inflation rose slightly to 9.1 per cent in May from 9 per cent in April, according to the ONS.
The increase matches what analysts had expected.
“Though still at historically high levels, the annual inflation rate was little changed in May,” said ONS chief economist Grant Fitzner.
“Continued steep food price rises and record high petrol prices were offset by clothing costs rising by less than this time last year, and a drop in often fluctuating computer games prices.”
“The price of goods leaving factories rose at their fastest rate in 45 years, driven by widespread food price rises, while the cost of raw materials leapt at their fastest rate on record.”
In response, Chancellor of the Exchequer, Rishi Sunak said this morning: “I know that people are worried about the rising cost of living, which is why we have taken targeted action to help families, getting £1,200 to the eight million most vulnerable households.
“We are using all the tools at our disposal to bring inflation down and combat rising prices – we can build a stronger economy through independent monetary policy, responsible fiscal policy which doesn’t add to inflationary pressures, and by boosting our long-term productivity and growth.”
In response to the news, several Square Mile insiders discussed with City A.M. what this means businesses, investors and ordinary Brits.
“There are no signs yet of inflation receding,” sighed Yael Selfin, Chief Economist at KPMG UK, this morning.
He added that “rising inflation is putting further pressure on policymakers to ease the burden on households, while complicating the Bank of England’s task."
"As the economy enters a period of weaker growth, a more aggressive increase in interest rates could see the Bank of England undershoot its target in the medium term.”
Household finances
“A further spike in inflation was expected – but this will offer little comfort to struggling households, particularly as wages aren’t keeping up,” said Connor Campbell at NerdWallet said.
“Clearly, the government must go beyond one-off financial support and develop a long-term economic recovery plan to help the UK emerge from its current economic predicament."
"Not all households, however, can afford to wait for such measures to be announced,” Campbell added.
He added: “There is no quick fix to the cost-of-living crisis."
"However, Britons should know that there are tools available to provide some short-term relief."
"And such action could set them on the right track towards regaining some control over their finances.”
Investors
Jatin Ondhia, CEO of FCA-regulated investment platform Shojin, told City A.M. this morning: “Prices are rising faster than they have for four decades and while May’s CPI figures represent little change from last month’s record hike, the tide remains strong and is set to continue rising, which could push inflation into double figures towards the end of the year.”
Ondhia noted that “the combination of sustained and high inflationary pressure with sharp rate rises and generally tighter monetary policy constitutes a radically different macroeconomic environment, posing a serious threat to investment returns and consumers’ finances.”
As the global economic outlook darkens, investors must take the time to reassess their inflation toolbox and consider which assets are likely to help cushion their portfolios against further hikes, he added.
Property and mortgages
Zooming in on the housing market, Annabelle Williams, personal finance specialist at digital wealth manager Nutmeg, said: “After a 2 percentage point rise from March to April, you could be forgiven for thinking the more muted increase from April to May would come as some light relief.”
She stressed that “while most Britons with a mortgage are on a fixed-rate deal, rate rises will be difficult for those on variable rates and people hoping to either move home or buy their first place.”
“Hopeful home-buyers and movers ought to get their skates on, because any further interest rate rises will affect affordability."
"Lack of supply in the housing market may keep prices high.”
“It’s too soon to call definitively whether there will be a recession in the UK this year, but the ducks are getting into a row."
"The economy may begin to teeter on the edge of a recession by the end of the summer,” she added.
International markets
Giles Coghlan, Chief Analyst, HYCM said: “If today’s CPI print tells us one thing, it is that the UK’s economic outlook looks very bleak indeed."
"With forecasts suggesting that GDP will head into negative territory for 2023, the Bank of England has an impossible task on its hands.”
Coghlan thinks that “without adequate quantitative tightening, the Monetary Policy Committee risks inflation spiralling wildly out of control and causing a wage-price spiral, which would be disastrous for the economy.
“As today’s inflation data came in just a fraction below the market’s maximum expectations of 9.3 per cent year-on-year, traders and investors should therefore watch for yet more aggressive action from the Monetary Policy Committee in August,” he continued.
“Ultimately, policymakers have very little choice other than to hike interest rates to bring down inflation.”
Predictions are currently suggesting that inflation could top 11 per cent this year – this, combined with the Ofgem cap rise due in October, means that the risk of a recession is looking more and more probable by the moment.
“Before the release of the inflation print, the short-term interest rate (STIR) markets were pricing in a 86% chance of a 50bps rate hike for the central bank’s August 04 meeting, so investors will no doubt be awaiting a hawkish response from the BoE,” Coghlan said.
Retailers
Discussing the latest inflation figures, Mohsin Rashid, co-founder of ZIPZERO, said: “Consumers are being battered on all sides."
"If you delve beyond today’s data about the eyewatering rate of inflation, the figures make for ugly reading: annual spending on food is expected to rise £380 this year, while energy bills are on track to pass £3,000 for the first time ever.”
Rashid stressed that “savvy financial management is important, yes."
"But to think consumers can work their way through such a challenging economic climate on their own is foolish."
"Businesses must do more – namely, retailers and energy providers.”
He added: “Positively, there’s a solution."
"Each year, retailers and brands spend a whopping £27bn on digital marketing."
"This money could be redirected back to consumers in the form of cash rewards from their everyday shopping, helping them to pay their spiralling energy bills.”
“This can only work if retailers and energy providers operate together on the same platform."
"Retailers can engage directly with shoppers, offering cash rewards from purchases; these cash rewards can then be used by shoppers to pay their energy bills.”
https://www.msn.com/en-us/money/markets ... 59982ea970
"Inflation jumps to 9.1 per cent: Worried City insiders respond to consumer prices climbing again"
Michiel Willems
22 June 2022
The rate of inflation rose again in May, remaining at 40-year highs, the Office for National Statistics said this morning.
The rate of Consumer Prices Index inflation rose slightly to 9.1 per cent in May from 9 per cent in April, according to the ONS.
The increase matches what analysts had expected.
“Though still at historically high levels, the annual inflation rate was little changed in May,” said ONS chief economist Grant Fitzner.
“Continued steep food price rises and record high petrol prices were offset by clothing costs rising by less than this time last year, and a drop in often fluctuating computer games prices.”
“The price of goods leaving factories rose at their fastest rate in 45 years, driven by widespread food price rises, while the cost of raw materials leapt at their fastest rate on record.”
In response, Chancellor of the Exchequer, Rishi Sunak said this morning: “I know that people are worried about the rising cost of living, which is why we have taken targeted action to help families, getting £1,200 to the eight million most vulnerable households.
“We are using all the tools at our disposal to bring inflation down and combat rising prices – we can build a stronger economy through independent monetary policy, responsible fiscal policy which doesn’t add to inflationary pressures, and by boosting our long-term productivity and growth.”
In response to the news, several Square Mile insiders discussed with City A.M. what this means businesses, investors and ordinary Brits.
“There are no signs yet of inflation receding,” sighed Yael Selfin, Chief Economist at KPMG UK, this morning.
He added that “rising inflation is putting further pressure on policymakers to ease the burden on households, while complicating the Bank of England’s task."
"As the economy enters a period of weaker growth, a more aggressive increase in interest rates could see the Bank of England undershoot its target in the medium term.”
Household finances
“A further spike in inflation was expected – but this will offer little comfort to struggling households, particularly as wages aren’t keeping up,” said Connor Campbell at NerdWallet said.
“Clearly, the government must go beyond one-off financial support and develop a long-term economic recovery plan to help the UK emerge from its current economic predicament."
"Not all households, however, can afford to wait for such measures to be announced,” Campbell added.
He added: “There is no quick fix to the cost-of-living crisis."
"However, Britons should know that there are tools available to provide some short-term relief."
"And such action could set them on the right track towards regaining some control over their finances.”
Investors
Jatin Ondhia, CEO of FCA-regulated investment platform Shojin, told City A.M. this morning: “Prices are rising faster than they have for four decades and while May’s CPI figures represent little change from last month’s record hike, the tide remains strong and is set to continue rising, which could push inflation into double figures towards the end of the year.”
Ondhia noted that “the combination of sustained and high inflationary pressure with sharp rate rises and generally tighter monetary policy constitutes a radically different macroeconomic environment, posing a serious threat to investment returns and consumers’ finances.”
As the global economic outlook darkens, investors must take the time to reassess their inflation toolbox and consider which assets are likely to help cushion their portfolios against further hikes, he added.
Property and mortgages
Zooming in on the housing market, Annabelle Williams, personal finance specialist at digital wealth manager Nutmeg, said: “After a 2 percentage point rise from March to April, you could be forgiven for thinking the more muted increase from April to May would come as some light relief.”
She stressed that “while most Britons with a mortgage are on a fixed-rate deal, rate rises will be difficult for those on variable rates and people hoping to either move home or buy their first place.”
“Hopeful home-buyers and movers ought to get their skates on, because any further interest rate rises will affect affordability."
"Lack of supply in the housing market may keep prices high.”
“It’s too soon to call definitively whether there will be a recession in the UK this year, but the ducks are getting into a row."
"The economy may begin to teeter on the edge of a recession by the end of the summer,” she added.
International markets
Giles Coghlan, Chief Analyst, HYCM said: “If today’s CPI print tells us one thing, it is that the UK’s economic outlook looks very bleak indeed."
"With forecasts suggesting that GDP will head into negative territory for 2023, the Bank of England has an impossible task on its hands.”
Coghlan thinks that “without adequate quantitative tightening, the Monetary Policy Committee risks inflation spiralling wildly out of control and causing a wage-price spiral, which would be disastrous for the economy.
“As today’s inflation data came in just a fraction below the market’s maximum expectations of 9.3 per cent year-on-year, traders and investors should therefore watch for yet more aggressive action from the Monetary Policy Committee in August,” he continued.
“Ultimately, policymakers have very little choice other than to hike interest rates to bring down inflation.”
Predictions are currently suggesting that inflation could top 11 per cent this year – this, combined with the Ofgem cap rise due in October, means that the risk of a recession is looking more and more probable by the moment.
“Before the release of the inflation print, the short-term interest rate (STIR) markets were pricing in a 86% chance of a 50bps rate hike for the central bank’s August 04 meeting, so investors will no doubt be awaiting a hawkish response from the BoE,” Coghlan said.
Retailers
Discussing the latest inflation figures, Mohsin Rashid, co-founder of ZIPZERO, said: “Consumers are being battered on all sides."
"If you delve beyond today’s data about the eyewatering rate of inflation, the figures make for ugly reading: annual spending on food is expected to rise £380 this year, while energy bills are on track to pass £3,000 for the first time ever.”
Rashid stressed that “savvy financial management is important, yes."
"But to think consumers can work their way through such a challenging economic climate on their own is foolish."
"Businesses must do more – namely, retailers and energy providers.”
He added: “Positively, there’s a solution."
"Each year, retailers and brands spend a whopping £27bn on digital marketing."
"This money could be redirected back to consumers in the form of cash rewards from their everyday shopping, helping them to pay their spiralling energy bills.”
“This can only work if retailers and energy providers operate together on the same platform."
"Retailers can engage directly with shoppers, offering cash rewards from purchases; these cash rewards can then be used by shoppers to pay their energy bills.”
https://www.msn.com/en-us/money/markets ... 59982ea970
Re: POLITICS
FOX NEWS
"Fed chairman contradicts Biden, says Russia’s Ukraine invasion not the main inflation driver"
Bradford Betz
22 JUNE 2022
Federal Reserve Chairman Jerome Powell on Wednesday appeared to contract President Biden’s repeated insistence that Russia’s invasion of Ukraine was the primary driver behind inflation in the U.S.
During a Senate Banking Committee hearing, Sen. Bill Hagerty, R-Tenn., got Powell to admit that inflation was high well before Russia’s Feb. 24 invasion of Ukraine.
Hagerty noted that in December 2021, inflation has risen to 7% – up from 1.4% in January 2021, when President Biden took office.
Since Russian tanks rolled across the border of Ukraine, inflation has risen incrementally to its current level of 8.6%.
With these statistics stated, Hagerty asked Powell if he believed the war in Ukraine was the "primary driver" of inflation as the Biden administration has tried to portray.
"No inflation was high … certainly before the war in Ukraine broke out," Powell said.
"I’m glad to hear you say that."
"The Biden administration seems to be intent on deflecting blame," Hagerty said, noting that as recently as Sunday, the administration "spread the misinformation that Putin’s invasion of Ukraine was the ‘biggest single driver of inflation.’"
"I’m glad you agree with me that that is not the truth," Hagerty told Powell.
Powell has sought to reassure the public that the Fed will raise interest rates high and fast enough to quell inflation, without tightening credit so much as to throttle the economy and cause a recession.
The central bank's accelerating rate increases – it started with a quarter-point hike in its key short-term rate in March, then a half-point increase in May, then three-quarters of a point last week – has alarmed investors and led to sharp declines in the financial markets.
Powell's testimony comes exactly a week after the Fed announced its three-quarters-of-a-point increase, its biggest hike in nearly three decades, to a range of 1.5% to 1.75%.
With inflation at a 40-year high, the Fed's policymakers also forecast a more accelerated pace of rate hikes this year and next than they had predicted three months ago, with its key rate reaching 3.8% by the end of 2023. That would be its highest level in 15 years.
The Associated Press contributed to this report.
https://www.msn.com/en-us/money/markets ... 59982ea970
"Fed chairman contradicts Biden, says Russia’s Ukraine invasion not the main inflation driver"
Bradford Betz
22 JUNE 2022
Federal Reserve Chairman Jerome Powell on Wednesday appeared to contract President Biden’s repeated insistence that Russia’s invasion of Ukraine was the primary driver behind inflation in the U.S.
During a Senate Banking Committee hearing, Sen. Bill Hagerty, R-Tenn., got Powell to admit that inflation was high well before Russia’s Feb. 24 invasion of Ukraine.
Hagerty noted that in December 2021, inflation has risen to 7% – up from 1.4% in January 2021, when President Biden took office.
Since Russian tanks rolled across the border of Ukraine, inflation has risen incrementally to its current level of 8.6%.
With these statistics stated, Hagerty asked Powell if he believed the war in Ukraine was the "primary driver" of inflation as the Biden administration has tried to portray.
"No inflation was high … certainly before the war in Ukraine broke out," Powell said.
"I’m glad to hear you say that."
"The Biden administration seems to be intent on deflecting blame," Hagerty said, noting that as recently as Sunday, the administration "spread the misinformation that Putin’s invasion of Ukraine was the ‘biggest single driver of inflation.’"
"I’m glad you agree with me that that is not the truth," Hagerty told Powell.
Powell has sought to reassure the public that the Fed will raise interest rates high and fast enough to quell inflation, without tightening credit so much as to throttle the economy and cause a recession.
The central bank's accelerating rate increases – it started with a quarter-point hike in its key short-term rate in March, then a half-point increase in May, then three-quarters of a point last week – has alarmed investors and led to sharp declines in the financial markets.
Powell's testimony comes exactly a week after the Fed announced its three-quarters-of-a-point increase, its biggest hike in nearly three decades, to a range of 1.5% to 1.75%.
With inflation at a 40-year high, the Fed's policymakers also forecast a more accelerated pace of rate hikes this year and next than they had predicted three months ago, with its key rate reaching 3.8% by the end of 2023. That would be its highest level in 15 years.
The Associated Press contributed to this report.
https://www.msn.com/en-us/money/markets ... 59982ea970
Re: POLITICS
THE WASHINGTON EXAMINER
"Biden abuses executive authority to pursue his environmental agenda"
Maiya Clark
22 JUNE 2022
Plagued by inflation, a projected upcoming Republican wave in the midterm elections, and high gas prices, President Joe Biden is desperately seeking a win on clean energy.
To achieve that win, he has authorized the inappropriate use of the Defense Production Act — an egregious misuse of executive power.
Last Monday, Biden announced that he authorized use of the Defense Production Act to speed up the domestic production of clean energy technologies — like solar panels and heat pumps — for use in buildings.
The Defense Production Act gives the president a broad set of authorities to influence domestic industry in the interest of national defense.
Since it was passed at the start of the Korean War, the act has served as a valuable federal statute to ensure that, when called upon, the domestic industrial base is capable of providing essential materials and goods needed for the national defense.
Over the years, Congress broadened “national defense” to include national emergencies, like pandemics, terrorist attacks, and natural disasters.
Biden’s latest actions, however, strain the definition of national defense past the point of credulity.
He has authorized the act to serve his political goals — in this case, a radical environmental agenda.
Last year, Biden’s $2.2 trillion Build Back Better bill, which included billions in clean energy programs, failed to pass in Congress.
Sen. Joe Manchin, D-W.Va., who killed Biden’s landmark legislation, stated that part of his opposition to the bill was due to its climate and clean energy provisions, saying they “risk the reliability of our electric grid and increase our dependence on foreign supply chains.”
In this latest executive action, Biden has ignored Manchin’s objections and decided to pursue his agenda without the approval of Congress.
Biden’s misuse of Defense Production Act allocated funds is nothing new.
For example, the Obama administration’s 2012 invocation of the Defense Production Act to advance the production of biofuel was packaged as providing energy security for America’s warfighters.
However, it soon became clear that the flawed project had nothing to do with national defense, and everything to do with a radical and expensive (the Biofuel Production Project was allotted $230.5 million) environmental agenda.
Now, in a similar initiative, Biden has authorized the Department of Energy to use the Defense Production Act “to strengthen the resiliency of the nation’s supply chain” for solar, transformers and electric grid components, heat pumps, insulation, electrolyzers, fuel cells, and platinum group metals.
The administration has failed to justify how solar panels could meaningfully contribute to the national defense, even under an expanded definition of national defense.
According to Energy Secretary Jennifer Granholm, “For too long the nation’s clean energy supply chain has been over-reliant on foreign sources and adversarial nations.”
Likewise, according to the deputy defense secretary, Kathleen Hicks, “reducing America’s dependence on gas and oil is critical to U.S. national security.”
OK — so the policy is go green by investing in domestic solar manufacturing and we will become more energy independent and less reliant on foreign adversaries.
So, does a transition from oil and gas to solar panels make us less reliant on foreign sources and adversarial nations, thereby strengthening our national security?
The answer is simple: No!
This is plainly obvious by the administration’s decision to, in tandem with the Defense Production Act authorization to stimulate solar panel manufacturing, potentially make it easier for solar companies in the U.S. to import cheaper Chinese-made solar parts from Southeast Asia.
Biden’s two-year halt on new solar tariffs will allow domestic project developers to continue using foreign-made equipment while U.S. manufacturing presumably ramps up using taxpayer funds through the Defense Production Act.
Americans benefit from being able to access the most competitive technologies to meet their energy needs.
But the president’s supposed national security reasoning is just a red herring to manipulate energy markets to his preferred technology.
According to his order, we will simply be shifting our foreign reliance on energy from global oil markets to Asian solar components, while ignoring that solar energy is not a perfect replacement for oil in meeting peoples’ energy needs.
Thus, on the false pretense that clean energy strengthens national security by decreasing our reliance on foreign sources and adversarial nations, the Biden administration misused its authority with the Defense Production Act, and the U.S. is still reliant on foreign sources and a new adversarial nation — China.
So, this is bad energy policy, terrible trade policy, and even worse defense policy given that we will now be more dependent on China, which Secretary of State Anthony Blinken just called the “most serious long-term threat” to the world order.
Biden’s misuse of the Defense Production Act is all the more frustrating in light of the real, urgent national security needs the act could be used to address.
U.S. munitions stocks are being depleted as Javelin and Stinger missiles are being sent to Ukraine, and industry says it will take years to manufacture enough to replenish those stocks.
The Defense Production Act could force industry to prioritize those contracts and could provide funds to increase manufacturing capacity.
Instead, in choosing to pursue environmental pet projects, this administration is demonstrating a lack of seriousness about our national defense — at a time when the country cannot afford to be anything but serious.
https://www.msn.com/en-us/news/politics ... 59982ea970
"Biden abuses executive authority to pursue his environmental agenda"
Maiya Clark
22 JUNE 2022
Plagued by inflation, a projected upcoming Republican wave in the midterm elections, and high gas prices, President Joe Biden is desperately seeking a win on clean energy.
To achieve that win, he has authorized the inappropriate use of the Defense Production Act — an egregious misuse of executive power.
Last Monday, Biden announced that he authorized use of the Defense Production Act to speed up the domestic production of clean energy technologies — like solar panels and heat pumps — for use in buildings.
The Defense Production Act gives the president a broad set of authorities to influence domestic industry in the interest of national defense.
Since it was passed at the start of the Korean War, the act has served as a valuable federal statute to ensure that, when called upon, the domestic industrial base is capable of providing essential materials and goods needed for the national defense.
Over the years, Congress broadened “national defense” to include national emergencies, like pandemics, terrorist attacks, and natural disasters.
Biden’s latest actions, however, strain the definition of national defense past the point of credulity.
He has authorized the act to serve his political goals — in this case, a radical environmental agenda.
Last year, Biden’s $2.2 trillion Build Back Better bill, which included billions in clean energy programs, failed to pass in Congress.
Sen. Joe Manchin, D-W.Va., who killed Biden’s landmark legislation, stated that part of his opposition to the bill was due to its climate and clean energy provisions, saying they “risk the reliability of our electric grid and increase our dependence on foreign supply chains.”
In this latest executive action, Biden has ignored Manchin’s objections and decided to pursue his agenda without the approval of Congress.
Biden’s misuse of Defense Production Act allocated funds is nothing new.
For example, the Obama administration’s 2012 invocation of the Defense Production Act to advance the production of biofuel was packaged as providing energy security for America’s warfighters.
However, it soon became clear that the flawed project had nothing to do with national defense, and everything to do with a radical and expensive (the Biofuel Production Project was allotted $230.5 million) environmental agenda.
Now, in a similar initiative, Biden has authorized the Department of Energy to use the Defense Production Act “to strengthen the resiliency of the nation’s supply chain” for solar, transformers and electric grid components, heat pumps, insulation, electrolyzers, fuel cells, and platinum group metals.
The administration has failed to justify how solar panels could meaningfully contribute to the national defense, even under an expanded definition of national defense.
According to Energy Secretary Jennifer Granholm, “For too long the nation’s clean energy supply chain has been over-reliant on foreign sources and adversarial nations.”
Likewise, according to the deputy defense secretary, Kathleen Hicks, “reducing America’s dependence on gas and oil is critical to U.S. national security.”
OK — so the policy is go green by investing in domestic solar manufacturing and we will become more energy independent and less reliant on foreign adversaries.
So, does a transition from oil and gas to solar panels make us less reliant on foreign sources and adversarial nations, thereby strengthening our national security?
The answer is simple: No!
This is plainly obvious by the administration’s decision to, in tandem with the Defense Production Act authorization to stimulate solar panel manufacturing, potentially make it easier for solar companies in the U.S. to import cheaper Chinese-made solar parts from Southeast Asia.
Biden’s two-year halt on new solar tariffs will allow domestic project developers to continue using foreign-made equipment while U.S. manufacturing presumably ramps up using taxpayer funds through the Defense Production Act.
Americans benefit from being able to access the most competitive technologies to meet their energy needs.
But the president’s supposed national security reasoning is just a red herring to manipulate energy markets to his preferred technology.
According to his order, we will simply be shifting our foreign reliance on energy from global oil markets to Asian solar components, while ignoring that solar energy is not a perfect replacement for oil in meeting peoples’ energy needs.
Thus, on the false pretense that clean energy strengthens national security by decreasing our reliance on foreign sources and adversarial nations, the Biden administration misused its authority with the Defense Production Act, and the U.S. is still reliant on foreign sources and a new adversarial nation — China.
So, this is bad energy policy, terrible trade policy, and even worse defense policy given that we will now be more dependent on China, which Secretary of State Anthony Blinken just called the “most serious long-term threat” to the world order.
Biden’s misuse of the Defense Production Act is all the more frustrating in light of the real, urgent national security needs the act could be used to address.
U.S. munitions stocks are being depleted as Javelin and Stinger missiles are being sent to Ukraine, and industry says it will take years to manufacture enough to replenish those stocks.
The Defense Production Act could force industry to prioritize those contracts and could provide funds to increase manufacturing capacity.
Instead, in choosing to pursue environmental pet projects, this administration is demonstrating a lack of seriousness about our national defense — at a time when the country cannot afford to be anything but serious.
https://www.msn.com/en-us/news/politics ... 59982ea970
Re: POLITICS
BUSINESS INSIDER
"Biden's call for Congress to suspend federal gas taxes is landing with a thud with everyone ranging from McConnell to Pelosi"
jzeballos@businessinsider.com (Joseph Zeballos-Roig)
22 JUNE 2022
* Biden called on Congress to suspend federal gas taxes for three months on Wednesday.
* But he has very few allies to count on in Congress.
* Schumer and Pelosi didn't endorse the plan and McConnell panned it.
President Joe Biden urged Congress on Wednesday to suspend the 18 cent federal gas tax and a 24 cent per gallon tax on diesel for three months in an effort to slash rising prices at the gas pump.
It comes as the national average for a gallon of gas hovers around $5 with no sign of dropping anytime soon.
"Today I'm calling on Congress to suspend the Federal gas tax for the next 90 days, through the busy summer season, busy travel season," he said on Wednesday.
Biden also urged states to cut gas taxes on their own as well to provide Americans with additional financial relief.
But he has very few allies to count on in Capitol Hill, rendering it all but dead on arrival.
Many in his own party are bolting from the idea and Republicans are deriding it as an election-year gimmick that won't do much to bring down high gas prices.
Economists have long viewed the idea with skepticism as well.
"Whatever you thought of the merits of a gas tax holiday in February it is a worse idea now," Jason Furman, a former top economist to President Barack Obama, wrote on Twitter.
In recent months, the White House has taken steps to boost oil supply such as ordering a massive release of oil from the Strategic Petroleum Reserve, paired with an easing of regulations on biofuels.
But that has done little to quell the inflationary surge in gas prices, largely stemming from Western sanctions on Russia's energy sector to punish the Kremlin for invading Ukraine.
House Speaker Nancy Pelosi poured cold water on the plan in March when some Senate Democrats started floating it.
She said at the time that there was no guarantee that consumers would be able to pocket much of the savings.
"We will see where the consensus lies on a path forward for the President's proposal in the House and the Senate," she said in a Wednesday statement.
Senate Majority Leader Chuck Schumer similarly declined to endorse Biden's and didn't commit to putting a bill on the floor.
Other Democrats were not on board either.
Sen. Joe Manchin of West Virginia, a conservative Democrat with outsized influence over Biden's agenda, said he was uneasy with the idea.
"I'm not a yes right now, that's for sure," Manchin told ABC News.
Sen. Tom Carper of Delaware called it on Twitter a "shortsighted and inefficient way to provide relief."
Republicans were uniformly against it.
Senate Minority Leader Mitch McConnell assailed it and said "this administration's big new idea is a silly proposal that senior members of his own party have already shot down well in advance."
https://www.msn.com/en-us/news/politics ... 032bba94c0
"Biden's call for Congress to suspend federal gas taxes is landing with a thud with everyone ranging from McConnell to Pelosi"
jzeballos@businessinsider.com (Joseph Zeballos-Roig)
22 JUNE 2022
* Biden called on Congress to suspend federal gas taxes for three months on Wednesday.
* But he has very few allies to count on in Congress.
* Schumer and Pelosi didn't endorse the plan and McConnell panned it.
President Joe Biden urged Congress on Wednesday to suspend the 18 cent federal gas tax and a 24 cent per gallon tax on diesel for three months in an effort to slash rising prices at the gas pump.
It comes as the national average for a gallon of gas hovers around $5 with no sign of dropping anytime soon.
"Today I'm calling on Congress to suspend the Federal gas tax for the next 90 days, through the busy summer season, busy travel season," he said on Wednesday.
Biden also urged states to cut gas taxes on their own as well to provide Americans with additional financial relief.
But he has very few allies to count on in Capitol Hill, rendering it all but dead on arrival.
Many in his own party are bolting from the idea and Republicans are deriding it as an election-year gimmick that won't do much to bring down high gas prices.
Economists have long viewed the idea with skepticism as well.
"Whatever you thought of the merits of a gas tax holiday in February it is a worse idea now," Jason Furman, a former top economist to President Barack Obama, wrote on Twitter.
In recent months, the White House has taken steps to boost oil supply such as ordering a massive release of oil from the Strategic Petroleum Reserve, paired with an easing of regulations on biofuels.
But that has done little to quell the inflationary surge in gas prices, largely stemming from Western sanctions on Russia's energy sector to punish the Kremlin for invading Ukraine.
House Speaker Nancy Pelosi poured cold water on the plan in March when some Senate Democrats started floating it.
She said at the time that there was no guarantee that consumers would be able to pocket much of the savings.
"We will see where the consensus lies on a path forward for the President's proposal in the House and the Senate," she said in a Wednesday statement.
Senate Majority Leader Chuck Schumer similarly declined to endorse Biden's and didn't commit to putting a bill on the floor.
Other Democrats were not on board either.
Sen. Joe Manchin of West Virginia, a conservative Democrat with outsized influence over Biden's agenda, said he was uneasy with the idea.
"I'm not a yes right now, that's for sure," Manchin told ABC News.
Sen. Tom Carper of Delaware called it on Twitter a "shortsighted and inefficient way to provide relief."
Republicans were uniformly against it.
Senate Minority Leader Mitch McConnell assailed it and said "this administration's big new idea is a silly proposal that senior members of his own party have already shot down well in advance."
https://www.msn.com/en-us/news/politics ... 032bba94c0
Re: POLITICS
RIGZONE
"Shipping Costs Soar"
by Bloomberg | Elizabeth Low
Thursday, June 23, 2022
The dislocation of global fuel markets after Russia’s invasion of Ukraine has boosted the cost of shipping products such as diesel by sea.
Rates to haul fuels such as gasoline and diesel, known in the industry as clean tanker freight, have more than doubled this year to the highest since April 2020, according to Baltic Exchange data.
On one key route in Asia, ship owners are now earning over $47,000 a day transporting products from South Korea to the distribution hub of Singapore, compared with $98 a day prior to the war.
The Russian invasion has exacerbated a tightening of energy markets, upending trade flows and forcing buyers to scour the world for alternative fuel supplies.
An initial surge in rates for hauling crude hasn’t been sustained, partly due to reduced demand from China, leading to some shipowners switching part of their fleet to haul fuels rather than oil, according to two tanker charterers.
Clean tanker freight rates were last at this elevated level in early 2020, after the pandemic decimated oil consumption and forced fuel producers to export as much product as possible to alleviate swelling storage tanks.
Demand for ships to haul fuels are expected to climb by 6% this year, underpinned by Europe, said Anoop Singh, head of tanker research at Braemar ACM Shipbroking.
“The European resolve to reduce reliance on Russian supplies will likely outlive the war in Ukraine and that will re-draw trade routes,” said Singh.
Russia was the single largest external supplier of diesel to Europe prior to the war.
Since the invasion in late February, more long-range class ships are being used to transport refined fuels, according to S&P Global Commodity Insights analysts Fotios Katsoulas and Krispen Atkinson.
Longer voyages are reducing the amount of available capacity on vessels and driving up freight rates, they said.
LR tankers are the most common and are used to carry both products and oil.
The surge in rates is being replicated across other regions.
Ship owners transporting fuel from the Middle East to Japan on a route known as TC-5 -- a key passage for naphtha -- were earning more than $50,000 a day on Wednesday, compared with as low as $61 a day in February, according to Baltic Exchange data.
The cost of shipping fuel from the US to Brazil on the TC-18 route was near $37,000 a day, up from $3,800 a day four months ago.
https://www.rigzone.com/news/wire/shipp ... 8-article/
"Shipping Costs Soar"
by Bloomberg | Elizabeth Low
Thursday, June 23, 2022
The dislocation of global fuel markets after Russia’s invasion of Ukraine has boosted the cost of shipping products such as diesel by sea.
Rates to haul fuels such as gasoline and diesel, known in the industry as clean tanker freight, have more than doubled this year to the highest since April 2020, according to Baltic Exchange data.
On one key route in Asia, ship owners are now earning over $47,000 a day transporting products from South Korea to the distribution hub of Singapore, compared with $98 a day prior to the war.
The Russian invasion has exacerbated a tightening of energy markets, upending trade flows and forcing buyers to scour the world for alternative fuel supplies.
An initial surge in rates for hauling crude hasn’t been sustained, partly due to reduced demand from China, leading to some shipowners switching part of their fleet to haul fuels rather than oil, according to two tanker charterers.
Clean tanker freight rates were last at this elevated level in early 2020, after the pandemic decimated oil consumption and forced fuel producers to export as much product as possible to alleviate swelling storage tanks.
Demand for ships to haul fuels are expected to climb by 6% this year, underpinned by Europe, said Anoop Singh, head of tanker research at Braemar ACM Shipbroking.
“The European resolve to reduce reliance on Russian supplies will likely outlive the war in Ukraine and that will re-draw trade routes,” said Singh.
Russia was the single largest external supplier of diesel to Europe prior to the war.
Since the invasion in late February, more long-range class ships are being used to transport refined fuels, according to S&P Global Commodity Insights analysts Fotios Katsoulas and Krispen Atkinson.
Longer voyages are reducing the amount of available capacity on vessels and driving up freight rates, they said.
LR tankers are the most common and are used to carry both products and oil.
The surge in rates is being replicated across other regions.
Ship owners transporting fuel from the Middle East to Japan on a route known as TC-5 -- a key passage for naphtha -- were earning more than $50,000 a day on Wednesday, compared with as low as $61 a day in February, according to Baltic Exchange data.
The cost of shipping fuel from the US to Brazil on the TC-18 route was near $37,000 a day, up from $3,800 a day four months ago.
https://www.rigzone.com/news/wire/shipp ... 8-article/
Re: POLITICS
CNBC
"Russia’s ruble hit its strongest level in 7 years despite massive sanctions. Here’s why"
Natasha Turak @NATASHATURAK
PUBLISHED THU, JUN 23 2022
KEY POINTS
* Russia’s ruble hit 52.3 to the dollar on Wednesday, an increase of roughly 1.3% on the previous day and its strongest level since May 2015.
* The ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing this will make the country’s exports less competitive.
Russia’s ruble hit 52.3 to the dollar on Wednesday, its strongest level since May 2015.
On Thursday afternoon in Moscow, the currency was trading at 54.2 to the greenback, slightly weaker but still near seven-year highs.
That’s a world away from its plunge to 139 to the dollar in early March, when the U.S. and European Union started rolling out unprecedented sanctions on Moscow in response to its invasion of Ukraine.
The ruble’s stunning surge in the following months is being cited by the Kremlin as “proof” that Western sanctions aren’t working.
“The idea was clear: crush the Russian economy violently,” Russian President Vladimir Putin said last week during the annual St. Petersburg International Economic Forum.
“They did not succeed."
"Obviously, that didn’t happen.”
In late February, following the ruble’s initial tumble and four days after the invasion of Ukraine began on Feb 24, Russia more than doubled the country’s key interest rate to a whopping 20% from a prior 9.5%.
Since then, the currency’s value has improved to the point that it’s lowered the interest rate three times to reach 11% in late May.
The ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing that this will make the country’s exports less competitive.
But what’s really behind the currency’s rise, and can it be sustained?
Russia is raking in record oil and gas revenue
The reasons are, to put it simply: strikingly high energy prices, capital controls and sanctions themselves.
Russia is the world’s largest exporter of gas and the second-largest exporter of oil.
Its primary customer?
The European Union, which has been buying billions of dollars worth of Russian energy per week while simultaneously trying to punish it with sanctions.
That’s put the EU in an awkward spot – it has now sent exponentially more money to Russia in oil, gas and coal purchases than it has sent Ukraine in aid, which has helped fill the Kremlin’s war chest.
And with Brent crude prices 60% higher than they were this time last year, even though many Western countries have curbed their Russian oil buying, Moscow is still making a record profit.
In the Russia-Ukraine war’s first 100 days, the Russian Federation raked in $98 billion in revenue from fossil fuel exports, according to the Centre for Research on Energy and Clean Air, a research organization based in Finland.
More than half of those earnings came from the EU, at about $60 billion.
And while many EU countries are intent on cutting their reliance on Russian energy imports, this process could take years – in 2020, the bloc relied on Russia for 41% of its gas imports and 36% of its oil imports, according to Eurostat.
Yes, the EU passed a landmark sanctions package in May partially banning imports of Russian oil by the end of this year, but it had significant exemptions for oil delivered by pipeline, since landlocked countries like Hungary and Slovenia couldn’t access alternative oil sources that are shipped by sea.
“That exchange rate you see for the ruble is there because Russia is earning record current account surpluses in foreign exchange,” Max Hess, a fellow at the Foreign Policy Research Institute, told CNBC.
That revenue is mostly in dollars and euros via a complex ruble-swap mechanism.
“Although Russia may be selling slightly less to the West right now, as the West moves to cutting off [reliance on Russia], they are still selling a ton at all-time high oil and gas prices."
"So this is bringing in a big current account surplus.”
Russia’s current account surplus from January to May of this year was just over $110 billion, according to Russia’s central bank – more than 3.5 times the amount of that period last year.
Strict capital controls
Capital controls – or the government’s limiting of foreign currency leaving its country – have played a big role here, plus the simple fact that Russia can’t import as much any more thanks to sanctions, meaning it’s spending less of its money buying stuff from elsewhere.
“Authorities implemented pretty strict capital controls as soon as sanctions came on,” said Nick Stadtmiller, director of emerging markets strategy at Medley Global Advisors in New York.
“The result is money is flowing in from exports while there are relatively few capital outflows."
"The net effect of all this is a stronger ruble.”
Russia has now relaxed some of its capital controls and lowered its interest rate in an effort to weaken the ruble, since a stronger currency actually hurts its fiscal account.
The ruble: Really a ‘Potemkin rate’?
Because Russia is now cut off from the SWIFT international banking system and blocked from trading internationally in dollars and euros, it’s been left to essentially trade with itself, Hess said.
That means that while Russia’s built up a formidable volume of foreign reserves that bolster its currency at home, it can’t use those reserves to serve its import needs, thanks to sanctions.
The ruble’s exchange rate “is really a Potemkin rate, because sending money from Russia abroad given the sanctions — both on Russian individuals and Russian banks — is incredibly difficult, not to mention Russia’s own capital controls,” Hess said.
In politics and economics, Potemkin refers to fake villages that were purportedly constructed to provide an illusion of prosperity to Russian Empress Catherine the Great.
“So yes, the ruble on paper is quite a bit stronger, but that’s the result of crashing imports, and what’s the point of building up forex reserves, but to go and buy things from abroad that you need for your economy?"
"And Russia can’t do that.”
“We should really be looking at the underlying issues in the Russian economy, including the cratering imports,” Hess added.
“Even if the ruble says it has a high value, that is going to have a devastating impact on the economy and on quality of life.”
Does this reflect the actual Russian economy?
Does the ruble’s strength mean that Russia’s economic fundamentals are sound and have escaped the blow of sanctions?
Not so fast, analysts say.
“Ruble strength is linked to a surplus in the overall balance of payments, which is much more driven by exogenous factors linked to sanctions, commodity prices and policy measures than by longer term underlying macroeconomic trends and fundamentals,” said Themos Fiotakis, head of FX research at Barclays.
Russia’s Ministry of Economy said in mid-May that it expects unemployment to hit nearly 7% this year, and that a return to 2021 levels is unlikely until 2025 at the earliest.
Since Russia’s war in Ukraine began, thousands of international companies have exited Russia, leaving huge numbers of unemployed Russians in their wake.
Foreign investment has taken a massive hit, and poverty nearly doubled in just the first five weeks of the war alone, according to Russia’s federal statistics agency, Rosstat.
“The Russian ruble is no longer an indicator for the health of the economy,” Hess said.
“While the ruble has surged thanks to the Kremlin’s interference, its inattention to Russian’s well-being continues."
"Even Russia’s own statistics agency, famous for massaging numbers to meet the Kremlin’s goals, acknowledged that the number of Russians living in poverty rose from 12 [million] to 21 million people in Q1 2022.”
As for whether the ruble’s strength can be sustained, Fiotakis said, “It is very uncertain and depends on how the geopolitics evolve and policy adjusts.”
https://www.cnbc.com/2022/06/23/russias ... tions.html
"Russia’s ruble hit its strongest level in 7 years despite massive sanctions. Here’s why"
Natasha Turak @NATASHATURAK
PUBLISHED THU, JUN 23 2022
KEY POINTS
* Russia’s ruble hit 52.3 to the dollar on Wednesday, an increase of roughly 1.3% on the previous day and its strongest level since May 2015.
* The ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing this will make the country’s exports less competitive.
Russia’s ruble hit 52.3 to the dollar on Wednesday, its strongest level since May 2015.
On Thursday afternoon in Moscow, the currency was trading at 54.2 to the greenback, slightly weaker but still near seven-year highs.
That’s a world away from its plunge to 139 to the dollar in early March, when the U.S. and European Union started rolling out unprecedented sanctions on Moscow in response to its invasion of Ukraine.
The ruble’s stunning surge in the following months is being cited by the Kremlin as “proof” that Western sanctions aren’t working.
“The idea was clear: crush the Russian economy violently,” Russian President Vladimir Putin said last week during the annual St. Petersburg International Economic Forum.
“They did not succeed."
"Obviously, that didn’t happen.”
In late February, following the ruble’s initial tumble and four days after the invasion of Ukraine began on Feb 24, Russia more than doubled the country’s key interest rate to a whopping 20% from a prior 9.5%.
Since then, the currency’s value has improved to the point that it’s lowered the interest rate three times to reach 11% in late May.
The ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing that this will make the country’s exports less competitive.
But what’s really behind the currency’s rise, and can it be sustained?
Russia is raking in record oil and gas revenue
The reasons are, to put it simply: strikingly high energy prices, capital controls and sanctions themselves.
Russia is the world’s largest exporter of gas and the second-largest exporter of oil.
Its primary customer?
The European Union, which has been buying billions of dollars worth of Russian energy per week while simultaneously trying to punish it with sanctions.
That’s put the EU in an awkward spot – it has now sent exponentially more money to Russia in oil, gas and coal purchases than it has sent Ukraine in aid, which has helped fill the Kremlin’s war chest.
And with Brent crude prices 60% higher than they were this time last year, even though many Western countries have curbed their Russian oil buying, Moscow is still making a record profit.
In the Russia-Ukraine war’s first 100 days, the Russian Federation raked in $98 billion in revenue from fossil fuel exports, according to the Centre for Research on Energy and Clean Air, a research organization based in Finland.
More than half of those earnings came from the EU, at about $60 billion.
And while many EU countries are intent on cutting their reliance on Russian energy imports, this process could take years – in 2020, the bloc relied on Russia for 41% of its gas imports and 36% of its oil imports, according to Eurostat.
Yes, the EU passed a landmark sanctions package in May partially banning imports of Russian oil by the end of this year, but it had significant exemptions for oil delivered by pipeline, since landlocked countries like Hungary and Slovenia couldn’t access alternative oil sources that are shipped by sea.
“That exchange rate you see for the ruble is there because Russia is earning record current account surpluses in foreign exchange,” Max Hess, a fellow at the Foreign Policy Research Institute, told CNBC.
That revenue is mostly in dollars and euros via a complex ruble-swap mechanism.
“Although Russia may be selling slightly less to the West right now, as the West moves to cutting off [reliance on Russia], they are still selling a ton at all-time high oil and gas prices."
"So this is bringing in a big current account surplus.”
Russia’s current account surplus from January to May of this year was just over $110 billion, according to Russia’s central bank – more than 3.5 times the amount of that period last year.
Strict capital controls
Capital controls – or the government’s limiting of foreign currency leaving its country – have played a big role here, plus the simple fact that Russia can’t import as much any more thanks to sanctions, meaning it’s spending less of its money buying stuff from elsewhere.
“Authorities implemented pretty strict capital controls as soon as sanctions came on,” said Nick Stadtmiller, director of emerging markets strategy at Medley Global Advisors in New York.
“The result is money is flowing in from exports while there are relatively few capital outflows."
"The net effect of all this is a stronger ruble.”
Russia has now relaxed some of its capital controls and lowered its interest rate in an effort to weaken the ruble, since a stronger currency actually hurts its fiscal account.
The ruble: Really a ‘Potemkin rate’?
Because Russia is now cut off from the SWIFT international banking system and blocked from trading internationally in dollars and euros, it’s been left to essentially trade with itself, Hess said.
That means that while Russia’s built up a formidable volume of foreign reserves that bolster its currency at home, it can’t use those reserves to serve its import needs, thanks to sanctions.
The ruble’s exchange rate “is really a Potemkin rate, because sending money from Russia abroad given the sanctions — both on Russian individuals and Russian banks — is incredibly difficult, not to mention Russia’s own capital controls,” Hess said.
In politics and economics, Potemkin refers to fake villages that were purportedly constructed to provide an illusion of prosperity to Russian Empress Catherine the Great.
“So yes, the ruble on paper is quite a bit stronger, but that’s the result of crashing imports, and what’s the point of building up forex reserves, but to go and buy things from abroad that you need for your economy?"
"And Russia can’t do that.”
“We should really be looking at the underlying issues in the Russian economy, including the cratering imports,” Hess added.
“Even if the ruble says it has a high value, that is going to have a devastating impact on the economy and on quality of life.”
Does this reflect the actual Russian economy?
Does the ruble’s strength mean that Russia’s economic fundamentals are sound and have escaped the blow of sanctions?
Not so fast, analysts say.
“Ruble strength is linked to a surplus in the overall balance of payments, which is much more driven by exogenous factors linked to sanctions, commodity prices and policy measures than by longer term underlying macroeconomic trends and fundamentals,” said Themos Fiotakis, head of FX research at Barclays.
Russia’s Ministry of Economy said in mid-May that it expects unemployment to hit nearly 7% this year, and that a return to 2021 levels is unlikely until 2025 at the earliest.
Since Russia’s war in Ukraine began, thousands of international companies have exited Russia, leaving huge numbers of unemployed Russians in their wake.
Foreign investment has taken a massive hit, and poverty nearly doubled in just the first five weeks of the war alone, according to Russia’s federal statistics agency, Rosstat.
“The Russian ruble is no longer an indicator for the health of the economy,” Hess said.
“While the ruble has surged thanks to the Kremlin’s interference, its inattention to Russian’s well-being continues."
"Even Russia’s own statistics agency, famous for massaging numbers to meet the Kremlin’s goals, acknowledged that the number of Russians living in poverty rose from 12 [million] to 21 million people in Q1 2022.”
As for whether the ruble’s strength can be sustained, Fiotakis said, “It is very uncertain and depends on how the geopolitics evolve and policy adjusts.”
https://www.cnbc.com/2022/06/23/russias ... tions.html
Re: POLITICS
REUTERS
"Biden, 11 U.S. states to boost support for offshore wind energy"
Reuters
June 23, 2022
WASHINGTON, June 23 (Reuters) - The Biden administration is partnering with 11 East Coast states to accelerate development of offshore wind facilities and create jobs by supporting a domestic supply chain for the industry, the White House said on Thursday.
The move is part of President Joe Biden's push to fight climate change by expanding clean energy technologies.
That agenda has been weighed down recently by rising prices, particularly for gasoline.
Offshore wind is a major component of that strategy.
The administration has set a goal of reaching 30 gigawatts of capacity by 2030, up from just 42 megawatts currently with two small projects.
"The partnership will support efforts to provide Americans with cleaner and cheaper energy, create good-paying jobs, and make historic investments in new American energy supply chains, manufacturing, shipbuilding, and servicing," the White House said in a statement.
Biden administration officials met with state governors and labor leaders at the White House on Thursday.
"This is a real boost to our energy security," Biden told reporters following the meeting.
Administration officials were also scheduled to meet with oil refiners, one day after Biden floated a gasoline tax holiday to help ease fuel costs for U.S. families and workers.
The wind initiative will provide funding to create a domestic offshore wind supply chain and support a fleet of specialized vessels to build and service the projects, the White House said.
Ships ferrying workers and enormous components are crucial for offshore wind installations.
Until the United States develops its own fleet, offshore wind developers are expected to rely on vessels built overseas.
Congress is considering legislation to require those vessels to be staffed by American crews or mariners from the nation that matches the flag of the ship.
The offshore wind industry opposes the provision on the grounds that there are not currently enough American mariners trained to operate those vessels.
It is lobbying the Senate to exclude it from the bill, which passed in the House of Representatives.
"As written, the House maritime crewing provision is an existential threat to the future of offshore wind in the United States and the immediate result would be the delay and potential cancellation of the 19 offshore wind projects with power offtake contracts or awards," more than two dozen offshore wind companies and trade groups said in a letter to key senators on Thursday.
The federal-state wind partnership initially includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, and Rhode Island.
It will seek to expand to Western and Gulf states as those markets develop.
Reporting by Susan Heavey, additional reporting by Nichola Groom; Editing by Toby Chopra and David Gregorio
https://www.reuters.com/world/us/biden- ... 022-06-23/
"Biden, 11 U.S. states to boost support for offshore wind energy"
Reuters
June 23, 2022
WASHINGTON, June 23 (Reuters) - The Biden administration is partnering with 11 East Coast states to accelerate development of offshore wind facilities and create jobs by supporting a domestic supply chain for the industry, the White House said on Thursday.
The move is part of President Joe Biden's push to fight climate change by expanding clean energy technologies.
That agenda has been weighed down recently by rising prices, particularly for gasoline.
Offshore wind is a major component of that strategy.
The administration has set a goal of reaching 30 gigawatts of capacity by 2030, up from just 42 megawatts currently with two small projects.
"The partnership will support efforts to provide Americans with cleaner and cheaper energy, create good-paying jobs, and make historic investments in new American energy supply chains, manufacturing, shipbuilding, and servicing," the White House said in a statement.
Biden administration officials met with state governors and labor leaders at the White House on Thursday.
"This is a real boost to our energy security," Biden told reporters following the meeting.
Administration officials were also scheduled to meet with oil refiners, one day after Biden floated a gasoline tax holiday to help ease fuel costs for U.S. families and workers.
The wind initiative will provide funding to create a domestic offshore wind supply chain and support a fleet of specialized vessels to build and service the projects, the White House said.
Ships ferrying workers and enormous components are crucial for offshore wind installations.
Until the United States develops its own fleet, offshore wind developers are expected to rely on vessels built overseas.
Congress is considering legislation to require those vessels to be staffed by American crews or mariners from the nation that matches the flag of the ship.
The offshore wind industry opposes the provision on the grounds that there are not currently enough American mariners trained to operate those vessels.
It is lobbying the Senate to exclude it from the bill, which passed in the House of Representatives.
"As written, the House maritime crewing provision is an existential threat to the future of offshore wind in the United States and the immediate result would be the delay and potential cancellation of the 19 offshore wind projects with power offtake contracts or awards," more than two dozen offshore wind companies and trade groups said in a letter to key senators on Thursday.
The federal-state wind partnership initially includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, and Rhode Island.
It will seek to expand to Western and Gulf states as those markets develop.
Reporting by Susan Heavey, additional reporting by Nichola Groom; Editing by Toby Chopra and David Gregorio
https://www.reuters.com/world/us/biden- ... 022-06-23/
Re: POLITICS
REUTERS
"Germany triggers gas alarm stage, accuses Russia of 'economic attack'"
By Holger Hansen, Vera Eckert
JUNE 23, 2022
BERLIN (Reuters) - Germany triggered the “alarm stage” of its emergency gas plan on Thursday in response to falling Russian supplies but stopped short of allowing utilities to pass on soaring energy costs to customers in Europe’s largest economy.
The measure is the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine that has exposed the bloc’s dependence on Russian gas supplies and sparked a frantic search for alternative energy sources.
The step is a largely symbolic signal to companies and households but marks a major shift for Germany, which cultivated strong energy ties with Moscow stretching back to the Cold War.
Lower gas flows sparked warnings this week that Germany could fall into recession if Russian supplies halted altogether.
A survey on Thursday showed the economy losing momentum in the second quarter.
“We must not fool ourselves: The cut in gas supplies is an economic attack on us by (Russian President Vladimir) Putin,” Economy Minister Robert Habeck said in a statement.
Gas rationing would hopefully be avoided but cannot be ruled out, Habeck said:
“From now on, gas is a scarce commodity in Germany ..."
"We are therefore now obliged to reduce gas consumption, now already in summer.”
Russia has denied the supply cuts were deliberate, with state supplier Gazprom blaming a delay in the return of serviced equipment caused by Western sanctions.
The Kremlin on Thursday said Russia “strictly fulfils all its obligations” to Europe.
Berlin will provide a 15 billion euro ($15.76 billion) credit line to fill gas storage and launch a gas auction model this summer to encourage industrial users to save gas.
The second “alarm stage” of a three-stage emergency plan means authorities see a high risk of long-term supply shortages.
It includes a clause allowing utilities to immediately pass on high prices to industry and households.
Habeck said Germany was not at that point, but the clause might get triggered if the supply squeeze and price gains persisted, pushing power companies deeper into the red.
“If this minus becomes so big that the companies can’t bear it any more and they fall down, the whole market threatens to fall down at some point - so a Lehman Brothers effect in the energy system,” he said, referring to the U.S. investment bank’s 2008 collapse that rippled through global financial markets.
Local utility association VKU asked the government to protect consumers with subsidies or risk utilities going bust because of low-income retail customers defaulting on payments.
The President of the Federal Network Agency, Klaus Mueller, believed it was possible for consumer prices for gas to triple.
“If you extrapolate it, it depends a lot on how you heat, how your building is built, but it can triple the previous gas bill,” he told RTL/ntv broadcasters.
The move to Phase 2 had been anticipated since Gazprom cut flows via the Nord Stream 1 pipeline across the Baltic Sea to just 40% of capacity last week.
Data released on Thursday showed Germany has imported 22% less natural gas in the first four months of 2022 but the cost surged 170% over the same period.
Facing dwindling deliveries from main supplier Russia, Germany has since late March been at Phase 1, which includes stricter monitoring of daily flows and a focus on filling gas storage facilities.
“The declaration of the alarm stage does not immediately change the fundamental status quo,” German energy provider E.ON said.
It was important, though, that the government was preparing and taking steps to stabilize markets and gas supply, it said an emailed statement to Reuters.
RISK OF FULL DISRUPTION
In the second stage, the market is still able to function without the need for state intervention that would kick in the final emergency stage.
Nord Stream 1 is due to undergo maintenance on July 11-21 when flows will stop.
Hanns Koenig of consultancy Aurora Energy Services in Berlin said Gazprom might find reasons to drag out the process.
“Extended maintenance of Nord Stream 1 would further tighten the market and make it harder to fill gas storage until winter."
"This is of course in Russia’s strategic interest.”
Russia may cut off gas to Europe entirely to bolster its political leverage, the head of the International Energy Agency (IEA) warned on Wednesday, urging Europe to prepare now.
Russian gas flows to Europe via Nord Stream 1 and through Ukraine were stable on Thursday, while reverse flows on the Yamal pipeline edged up, operator data showed.
Dutch wholesale gas prices, the European benchmark, rose as much as 8% on Thursday.
Several countries have outlined measures to withstand a supply squeeze and avert winter energy shortages and an inflation spike that could test Europe’s resolve to maintain sanctions on Russia.
Supply cuts have driven German companies to contemplate painful production cuts and resorting to polluting energy sources previously considered unthinkable.
The European Union and Norway unveiled a deal on Thursday allowing the bloc to tap more gas from western Europe’s biggest producer.
The EU also signalled a temporary return to coal to plug the gap after calling Moscow’s gas supply cuts “rogue moves.”
Its climate policy chief Frans Timmermans said 10 of the EU’s 27 member countries have issued an “early warning” on gas supply - the first of three crisis levels.
“The risk of full gas disruption is now more real than ever before,” he said.
Reporting by Holger Hansen, Christoph Steitz, Christian Kraemer, Vera Eckert, Tom Sims, Marwa Rashad, Kate Abnett, Nora Buli, Tom Käckenhoff, Paul Carrel, Miranda Murray and Riham Alkousaa; writing by Matthias Williams; Editing by Tomasz Janowski, Elaine Hardcastle
https://www.reuters.com/article/ukraine ... SKBN2O40C2
"Germany triggers gas alarm stage, accuses Russia of 'economic attack'"
By Holger Hansen, Vera Eckert
JUNE 23, 2022
BERLIN (Reuters) - Germany triggered the “alarm stage” of its emergency gas plan on Thursday in response to falling Russian supplies but stopped short of allowing utilities to pass on soaring energy costs to customers in Europe’s largest economy.
The measure is the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine that has exposed the bloc’s dependence on Russian gas supplies and sparked a frantic search for alternative energy sources.
The step is a largely symbolic signal to companies and households but marks a major shift for Germany, which cultivated strong energy ties with Moscow stretching back to the Cold War.
Lower gas flows sparked warnings this week that Germany could fall into recession if Russian supplies halted altogether.
A survey on Thursday showed the economy losing momentum in the second quarter.
“We must not fool ourselves: The cut in gas supplies is an economic attack on us by (Russian President Vladimir) Putin,” Economy Minister Robert Habeck said in a statement.
Gas rationing would hopefully be avoided but cannot be ruled out, Habeck said:
“From now on, gas is a scarce commodity in Germany ..."
"We are therefore now obliged to reduce gas consumption, now already in summer.”
Russia has denied the supply cuts were deliberate, with state supplier Gazprom blaming a delay in the return of serviced equipment caused by Western sanctions.
The Kremlin on Thursday said Russia “strictly fulfils all its obligations” to Europe.
Berlin will provide a 15 billion euro ($15.76 billion) credit line to fill gas storage and launch a gas auction model this summer to encourage industrial users to save gas.
The second “alarm stage” of a three-stage emergency plan means authorities see a high risk of long-term supply shortages.
It includes a clause allowing utilities to immediately pass on high prices to industry and households.
Habeck said Germany was not at that point, but the clause might get triggered if the supply squeeze and price gains persisted, pushing power companies deeper into the red.
“If this minus becomes so big that the companies can’t bear it any more and they fall down, the whole market threatens to fall down at some point - so a Lehman Brothers effect in the energy system,” he said, referring to the U.S. investment bank’s 2008 collapse that rippled through global financial markets.
Local utility association VKU asked the government to protect consumers with subsidies or risk utilities going bust because of low-income retail customers defaulting on payments.
The President of the Federal Network Agency, Klaus Mueller, believed it was possible for consumer prices for gas to triple.
“If you extrapolate it, it depends a lot on how you heat, how your building is built, but it can triple the previous gas bill,” he told RTL/ntv broadcasters.
The move to Phase 2 had been anticipated since Gazprom cut flows via the Nord Stream 1 pipeline across the Baltic Sea to just 40% of capacity last week.
Data released on Thursday showed Germany has imported 22% less natural gas in the first four months of 2022 but the cost surged 170% over the same period.
Facing dwindling deliveries from main supplier Russia, Germany has since late March been at Phase 1, which includes stricter monitoring of daily flows and a focus on filling gas storage facilities.
“The declaration of the alarm stage does not immediately change the fundamental status quo,” German energy provider E.ON said.
It was important, though, that the government was preparing and taking steps to stabilize markets and gas supply, it said an emailed statement to Reuters.
RISK OF FULL DISRUPTION
In the second stage, the market is still able to function without the need for state intervention that would kick in the final emergency stage.
Nord Stream 1 is due to undergo maintenance on July 11-21 when flows will stop.
Hanns Koenig of consultancy Aurora Energy Services in Berlin said Gazprom might find reasons to drag out the process.
“Extended maintenance of Nord Stream 1 would further tighten the market and make it harder to fill gas storage until winter."
"This is of course in Russia’s strategic interest.”
Russia may cut off gas to Europe entirely to bolster its political leverage, the head of the International Energy Agency (IEA) warned on Wednesday, urging Europe to prepare now.
Russian gas flows to Europe via Nord Stream 1 and through Ukraine were stable on Thursday, while reverse flows on the Yamal pipeline edged up, operator data showed.
Dutch wholesale gas prices, the European benchmark, rose as much as 8% on Thursday.
Several countries have outlined measures to withstand a supply squeeze and avert winter energy shortages and an inflation spike that could test Europe’s resolve to maintain sanctions on Russia.
Supply cuts have driven German companies to contemplate painful production cuts and resorting to polluting energy sources previously considered unthinkable.
The European Union and Norway unveiled a deal on Thursday allowing the bloc to tap more gas from western Europe’s biggest producer.
The EU also signalled a temporary return to coal to plug the gap after calling Moscow’s gas supply cuts “rogue moves.”
Its climate policy chief Frans Timmermans said 10 of the EU’s 27 member countries have issued an “early warning” on gas supply - the first of three crisis levels.
“The risk of full gas disruption is now more real than ever before,” he said.
Reporting by Holger Hansen, Christoph Steitz, Christian Kraemer, Vera Eckert, Tom Sims, Marwa Rashad, Kate Abnett, Nora Buli, Tom Käckenhoff, Paul Carrel, Miranda Murray and Riham Alkousaa; writing by Matthias Williams; Editing by Tomasz Janowski, Elaine Hardcastle
https://www.reuters.com/article/ukraine ... SKBN2O40C2